Pub. 2 2011 Issue 2

summer 2011 23 Step 3: Implement A due diligence process must be designed to evaluate potential investments. The due diligence process should identify criteria used to evaluate and filter through the pool of potential investment options. The implementation phase is usually performed with the assistance of an investment advisor because many fiduciaries lack the skill and/or resources to perform this step. When an advisor is used to assist in the implementation phase, fiduciaries and advisors must communicate to ensure that an agreed upon due diligence process is being used in the selection of investments or managers. Step 4: Monitor The final step can be the most time consuming and also the most neglected part of the process. Often fiduciaries pay less attention to ongoing monitoring—particularly when they get through the first three steps correctly. However, fiduciaries cannot neglect any of their responsibilities, because they could be equally liable for neg- ligence in each step. Creating a culture of fiduciary responsibility is critical for success in this final step. Much like safety programs in hospitals or manufacturing environments, a well established culture of safety helps people always ask the question, “Is this the right thing to do?” Creating the culture While the steps listed above establish the building blocks of a fidu- ciary process, in the absence of a culture of critical thinking, the process can become hollow. Simply going through the motions can lead to a plan with high costs and poor performance. [2] If you, as a leader, start by examining your own process and adopt the prudent practices listed above, you can help cultivate a culture of fiduciary responsibility. To further cement this culture, you will need to ensure that new ways of asking questions, running meetings and conducting investment reviews become your committees’ new rou- tine. Based on a recently released RandstadWork Watch Survey, Eileen Habelow, PhD., Randstad’s senior vice president of orga- nizational development, stated: “Going forward, companies can’t ignore culture. Rather, it should be addressed as a critical compo- nent of their overall business strategy.” [3] Through proper execution of the prudent process outlined in these four steps, trustees and investment committee members can reduce their liability by being confident that they are fulfilling their fiduciary responsibilities. Fiduciaries should embrace their responsibilities and understand that they will not be judged on the returns of their portfolio, but on the prudence employed in the creation of the returns. n [1] Prudent Practices for Investment Stewards, Fiduciary 360 & Reish Luftman Reicer & Cohen, 2008 [2] The Different Flavors of ERISA Fiduciaries, Redux, W. Scott Simon | 03-04-10 [3] New Randstad Work Watch Survey Reveals Secret Weapon for Business Success, Rand- stad, Atlanta, 10.04.10 For more information, please contact Mark Hogan, Regional Marketing Director, Pen- tegra Retirement Services at 800-872-3473, x579 or mhogan@pentegra.com. Like the strength of the Appalachian Mountains... West Virginia Community Banks deserve a strong Correspondent Bank working for them. The Bankers’ Bank has a solid tradition of personal service matched with superior products. “I look forward to earning your business and becoming your Correspondent Banker.” – Scott Jones, Vice President The Bankers’ Bank of Kentucky Your Correspondent Bank 800.248.3229 | 502.695.3000 | www.bbky.com Scott Jones - Vice President Cell: 502.609.2559 5504_W.VirginiaAd_final.indd 1 11/2/09 1:02:40 PM